duPont v. Equitable Security Trust Co.

115 A.2d 482, 35 Del. Ch. 261, 1955 Del. Ch. LEXIS 96
CourtCourt of Chancery of Delaware
DecidedJanuary 4, 1955
StatusPublished
Cited by2 cases

This text of 115 A.2d 482 (duPont v. Equitable Security Trust Co.) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
duPont v. Equitable Security Trust Co., 115 A.2d 482, 35 Del. Ch. 261, 1955 Del. Ch. LEXIS 96 (Del. Ct. App. 1955).

Opinion

Seitz, Chancellor:

This is an action by plaintiffs seeking to terminate a trust on the ground that they are the only parties in interest. Their action is resisted by the trustee and the guardian for the minor defendants on the ground that under a reasonable construction of the inter vivos trust agreement there is an implied remainder existing in favor of the members of a class whose members are not yet determinable but of which the minor defendants are possible members. The case is before the Court on plaintiffs’ motion for judgment on the pleadings pursuant to Chancery Court Rule 12(c), Del.C.Ann.

The basic facts are not in issue. On August 26, 1929, an inter vivos trust agreement was entered into between plaintiff, Samuel Halloclc duPont (hereafter called “Halloclc” or the “settlor”) and Equitable Security Trust Company,1 as trustee. The settlor was then in his late twenties and was, inferentially, a man of substantial means. The agreement provided for the support and maintenance of Halloclc’s then wife, Elizabeth, and two year old daughter, Eve, in the event his wife was granted an absolute divorce. The agreement recited that the settlor and his wife had separated and that she had taken their only daughter, Eve, and was about to establish a permanent residence in Nevada for the purpose of obtaining an absolute divorce. It further recited that the settlor preferred to make an amicable provision for the support and maintenance of his wife and of his daughter in case his wife should be successful in her divorce action, rather than permit the matter to become the subject of litigation. It also [263]*263recited that the provision made was satisfactory to the settlor and his wife. In fact, Elizabeth’s written consent is attached to the trust agreement.

By the terms of the agreement the settlor was to deliver 12,000 shares of duPont Company common stock to the trustee. The trustee was to retain the stock in the settlor’s name with a provision that if within one year from the date Elizabeth obtained a final divorce decree then the trustee was to transfer the stock to its name as trustee and to hold it in trust for the purposes set forth in the agreement. The agreement provided that if Elizabeth failed to obtain her divorce then the trustee was to redeliver the stock to the settlor, his executors, administrators, or assigns.

Elizabeth obtained her absolute divorce from the settlor on December 9, 1929, and thereafter the stock was transferred into the name of the trustee and has been so held up until the present time. The corpus is now 48,000 shares of duPont common by virtue of stock splits. The income from the trust has been paid in accordance with the terms of the instrument.

On February 18, 1936, Elizabeth married Leonard Govett and continued as his wife until her death on November 29, 1942.

The settlor and his daughter Eve are the sole plaintiffs in this action. Eve is now a married woman and the minor defendants are her children.

On April 5, 1954, the settlor and Eve notified the trustee that, since they were the only persons who had an interest in the trust property under the agreement of August 26, 1929, they had revoked the trust. They directed the trustee to deliver the trust corpus to them in certain stipulated proportions. As indicated, the trustee refused to recognize plaintiffs’ right to revoke and this action followed. Because of their possible interest, Eve’s minor children were made additional defendants on cross complaint and the Court appointed an independent guardian to represent them in this action. The guardian has also taken the position that plaintiffs may not terminate the trust.

[264]*264Generally speaking, under Delaware law, the sole parties in interest may terminate a trust. But the trustee argues that a termination of this trust would be contrary to the settlor’s intention. The trustee says that Claflin v. Claflin, 149 Mass. 19, 20 N.E. 454, 3 L.R.A. 370, is accepted in this state and requires that a settlor’s intention be given effect. And, says the trustee, that intention as here expressed was to create a trust for the benefit of the settlor’s wife and his daughter and her possible issue. I need not pass upon the applicability of the Claflin rule in Delaware because the ascertainment of the settlor’s intention with respect to Eve’s issue is the very matter to be decided here. No spendthrift provision is involved.

The sole question for decision, therefore, is whether under the provisions of the trust agreement, Hallock and Eve are the only persons who have an "interest” in the trust property. To resolve this question it is necessary to indulge in a rather laborious analysis of a prolix trust instrument.

The instrument contains many important provisions which are not easily identified by reference because the instrument does not have many identifying symbols. For convenience, therefore, all parties have agreed to give certain provisions paragraph letters. However, it should be understood that what are hereinafter called paragraphs A, B and C are in fact in one paragraph. The same is true of paragraphs D, E and F, while paragraphs G and H are in yet another single paragraph.

Paragraph A provides for a $4,000 monthly payment from income to Elizabeth for the support of herself and Eve until Eve shall arrive at age twenty-one or until Elizabeth remarries.

Paragraph B provides that after Eve reaches twenty-one years of age the trustee shall pay out of income the sum of $3;000 per month to Elizabeth for her support and maintenance during her life or until her remarriage and pay the sum of $1,000 per month to Eve during her life or to her lawful issue until the death of Elizabeth if Eve should predecease her mother leaving lawful issue surviving her.

[265]*265Paragraph C provides that the income in excess of $48,000 per year‘shall be paid to the settlor or in case of his death to Eve during her life or if she should die before Elizabeth, leaving lawful issue, then it shall be paid to such issue equally until the death of Elizabeth. In default of issue it was to be paid until Elizabeth’s death, to such persons as were entitled to the residue of the settlor’s estate under his will or in default of a will to such persons as would be his next of kin under the Delaware law.

Paragraph D provides that if Elizabeth shall not remarry and thus continue to receive the stipulated income during her life, then at her death the $48,000 yearly income was to be paid as follows: $12,000 to Eve for life and $36,000 to the settlor, if living, and if not living or upon his death the whole $48,000 was to be paid in equal monthly installments to Eve for her life and upon her death the entire corpus of the trust was thereupon to be paid over outright by the trustee to Eve’s lawful issue.

Paragraph E provides that if Eve shall predecease her mother leaving lawful issue surviving her mother and her mother shall not have remarried, then the part of the income that Eve was entitled to receive at the time of her death shall be paid in equal shares to such issue until the death of Elizabeth, and upon the death of Elizabeth the entire trust corpus shall be transferred outright in equal shares to the lawful issue of Eve.

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Bluebook (online)
115 A.2d 482, 35 Del. Ch. 261, 1955 Del. Ch. LEXIS 96, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dupont-v-equitable-security-trust-co-delch-1955.